Average Annual Yield

Some investments make money when they rise in value. Most stocks work this way (buy low, sell high). The amount of money you make on these is known as the return. Other investments make money by paying off a set amount of cash. Most bonds work this way...you loan money out and receive regular payments of interest and principal. These types of returns are known as the yield.

The average annual yield is a pretty straightforward way to figure out how much one of these yield-generating investments is paying off over time. Just look at the performance over a number of years and average out the per-year yield during that time. That's it. It's like Average Annual Return (AAR), except with yield-generating investments. These include things like bonds and dividends.